Bellharbour’s guide to Block Management
Posted 17 September 2021
As a prime London Block Management Company the knowledge that we’ve picked up along the way over the past 30 years has been at times exciting and at times daunting. It’s all about continuous improvement, and turning challenges into a growth experience that just makes what we do better!
Block Management (leasehold management, estate management, or remote property management) refers to the process of managing residential blocks on behalf of Resident Management Companies (RMCs) or freeholders. If you want to know more about what a Block Management Company, (often referred to as a managing agent) does, it’s a good idea to understand the block management landscape and the role of the RMC directors the managing agent works with.
Block management today
Over the years, and more so recently, apartment blocks have evolved into complex buildings, often with additional considerations such as leisure facilities, swimming pools, high-tech function rooms, and concierge parcel tracking that require specific technical or mechanical systems and processes. Contactless systems such as building entry and lift controls literally leave the door open to potential technical issues or breakdown, meaning higher levels of monitoring, checking and risk assessments need to be factored into the building management. Buildings with balconies and roof gardens or terraces have become more common, and also require a high level of maintenance and resident guidance to ensure health and safety regulations are met.
That being said about the building itself, there has been a rapid change in resident expectations from their managing agent, more so for block management than residential estates. Communication, clarity of information, and transparency of accounts factor high on the list, meaning the right communication channels need to be in place to make that vital ‘difference’.
Many blocks are tenanted, which brings a different challenge, as the property owner may not live in the block, the county, or even the same country!
What makes a good Block Management Company?
Taking care of a residential building can often be stressful and time-consuming, and a freeholder may not have the time or professional skills to take this on. Therefore, giving a BMC control of the property eases the burden of landlords and ensures the leaseholders receive the best services. Besides, a well-maintained property helps to retain its value.
A good BMC should be well staffed with property teams proficient in the necessary skills for managing the property. For instance, they should understand legal aspects such as tenancy and leasehold property laws. They should know the property infrastructure as well as the environment landscape – a mantra often referred to as KYP (Know Your Property). If any maintenance work requires contractors, the block management company should ensure each project (or ‘major works’) is done effectively, and the property owner gets value for money at all times. Staff training and CPD should be a part of the BMC’s ethos. A good BMC should encourage its property managers to ‘Know Your Client’ and ‘Know Your Budget’. These are the fundamentals that ensure details are never missed; solid principles that often lead to feedback such as this:
“Thank you for the insurance premium allocation percentage, it was correct this time for the first time in years. I know it is somewhat a detail - but when one gets details right then I know I can trust them on other/bigger things. I used to think management companies were all the same, but I am changing my opinion thanks to you and Bellharbour. Keep up the good work.”
Services provided by a managing agent
Your BMC should employ relevant teams qualified to provide the following vital services:
- Insurance and Claims
Leasehold properties must be insured to protect them from various risks such as floods or fires. A BMC must ensure the building is fully covered and will be able to provide the best advice.
- Health and Safety Compliance
Compliance with health and safety standards is essential to ensure the residents’ safety within the communal areas. The BMC must be familiar with the relevant safety legislation and ensure compliance. For instance, they should ensure the building has safe access, adequate lighting, and emergency systems in place. All residents should be made aware of what to do in the event of an emergency.
- Maintain Property Accounts
Apart from collecting service charges, a good BMC will be confident in preparing accounting records for the property. The accounts need to clearly state what the resident is paying for and why. A good BMC should not be asked for explanations of any documents or correspondence that they receive.
- Building Maintenance
A block manager will preserve the value of the property through timely repairs and ensuring professional maintenance. They will hire the right contractors to complete any repair work at a reasonable cost, and within the budget. A good BMC will have a list of reliable and vetted contractors to call on.
- Site Visits
The BMC will need to visit the premises regularly (either as pre-announced site visits or as planned resident surgeries) to ensure the shared spaces are in perfect condition and the residents can air any concerns or queries face to face.
Switching agent
Changing from one managing agent to another is not a complicated process. However, before taking the first step, ensure you read the legal agreements and understand the legal rights. You cannot end a contract if it breaches the lease agreement. You can only terminate the agreement with the current managing agent if there is just cause for termination. Normally all leaseholders become members of the Resident Management Company when they purchase their property, so first, find out if you have the power to affect the changes in the property. For instance, in a tri-party lease, where the freeholder/landlord, the management company, and the first leaseholder/property owner are named in the contract, the directors of the RMC have the authority to change the agent. Leaseholders can propose the changes to the current directors or become a director themselves to effect the change.
Alternatively, Right to Manage allows residents to decide on the management issues of their property. The legislation works even when the property management is providing quality services. However, for the right to manage to take effect, the participating tenants must be living in flats and not houses. Additionally, two-thirds of the apartment owners must have long-term leases, and 50% of the residents should be willing to subscribe to the RTM process. The legislation is only valid on blocks of flats used for residential purposes and not business.
The landlord can dispute the Right to Manage claim within 28 days, and the tribunal will determine if the RTM will hold. If there are no disputes, the RTM automatically takes over the management.
Change of managing agent checklist
You do not have to wait until the contract ends to change agents but ensure you do not violate the notice periods stipulated in the agreement, which often range between 30 to 90 days.
- Complete the Termination Notice
The RMC director or the landlord can initiate the termination process by writing a letter or email to the current managing agent stating the termination date and reasons for ending the contract. If you send the letter, obtain proof of postage to ensure sufficient evidence of the notice of termination.
- Wait for confirmation from the current managing agent
The managing agent should confirm receipt of the termination notice by writing a letter to the RMC acknowledging the date that they will cease operations. The confirmation letter also creates a paper trail that can be used in court or tribunal proceedings. However, if the managing agent disagrees with the termination, they can file a dispute with the tribunal.
- Put the leaseholders at ease
When the notice is in effect, residents paying the service charge must receive a notification about the change from the landlord and the managing agent. The message should put them at ease that their tenancy is secure.
- Closing of accounts and handover of documents
The property manager will hand over the balances and provide all the financial records of the period they managed the property. If the current manager holds the residents’ security deposits, they should transfer them to the new agent. The transfer paperwork includes lease agreements, performance certificates, safety and repair reports, and inventory details. The new agent should also receive the keys.
After the switch
If looking to switch, we advise that you choose a BMC who can demonstrate their expertise in swiftly turning around poorly managed blocks. After RMC directors make the first step to terminate the current arrangement, the incoming agent will use the notice period (typically 3 months) to formulate a plan to improve services to you and your property. They should ensure the switch is trouble-free by liaising with the outgoing agent to transfer account balances, service charges, and the necessary documents.
After the initial assessment, the new agent should compile a list of repairs and maintenance work they see will be necessary to plan in. They should also host a meeting with the directors to determine any challenges facing the residents and schedule a resident meeting to put faces to the name. We are happy to provide further advice on any of the matters discussed here, simply contact mike.brown@bellharbour.co.uk
